Daily Market Analysis – 13th July, 2015
By FxGrow Research & Analysis Team
Eurozone Leaders have reached a Greek Bailout Agreement
Eurozone leaders have agreed upon a Greek bailout deal and keep Greece in the Euro. European Summit Chair Donald Tusk tweeted in a message “Euro Summit has unanimously reached agreement”. The new bailout proposed for Greece will include serious economic reforms and financial support.
"After 17 hours of negotiations, we have finally reached it. One can say that we have ‘agreement’. Leaders have agreed in principle that they are ready to start negotiations on an ESM programme, which in other words means continued support for Greece" - EU council President Donald Tusk.
"There are strict conditions to be met. The approval of several national parliaments, including the Greek parliament, is now needed for negotiations on an ESM programme to formally begin" - EU council President Donald Tusk.
Following the news EURUSD shot up and touched a high of 1.1195 in the European trading session. Euro was unable to hold on and drifted lower as the traders sentiments shifted towards US rate hike later this year.
The third bailout program for Greece is estimated at 86 billion euros and will require Greek parliament to push legislation including tax and pension reforms as demanded by its creditors.
“Greece had secured debt restructuring and a 35 billion euro growth package. We fought a tough battle. We face difficult decisions” - Greek Prime Minister Alexis Tsipras.
“I think the euro is being pulled down by expectations that higher US rates will support the dollar, and the cost of Greece deal, including a worsening Greek economic crisis and increasing fissures in Europe’s leadership” - strategist at Union Bancaire Privée.
“The country which we help has shown a willingness and readiness to carry out reforms. The advantages far outweigh the disadvantages" - German Chancellor Angela Merkel.
The Greek Parliament needs to approve the terms of the agreement without any delay. A fund will be created to monetize some Greek State assets owned by the Greek government to help pay down the country’s debt.
Greece will also need to seek the assistance of the International Monetary Fund to monitor the country’s adherence to its bailout commitments.
Euro group head Jeroen Dijsselbloem said a fund will be set up to tackle the debt and recapitalization of the country’s banks. The total size of the fund would be around 50 billion euros.
“Once approximately €25 billion needed to recapitalize the banks have been used, 50% of the remaining funds will be used to bring down debt even more, and 50% can be invested in Greece by the Greek government. This is one of the key elements on both debt sustainability and to let growth return to Greece.” - Euro group head Jeroen Dijsselbloem.
Crude oil is trading lower at $51.66 after IEA reported that world oil demand will be slower in the next year.
Gold is trading lower in the Europe at 1156.24, while Silver is weak at 15.47
13th July 2015 – 10:05hrs GMT
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